Forecaster of Bitcoin’s $70K Pre-Halving Surge Now Bearish
The Bitcoin analyst who accurately forecasted bitcoin’s low in November 2022 and the subsequent surge to all-time highs before the halving event has now adopted a bearish outlook on risk assets, such as tech stocks and cryptocurrencies.Markus Thielen, founder of 10X Research, expressed concern that risk assets are on the brink of a significant price correction, citing unexpected and persistent inflation. He noted that the bond market now projects less than three rate cuts, with 10-year Treasury Yields exceeding 4.50%, signaling a crucial tipping point for risk assets.
Thielen disclosed that his firm sold all tech stocks due to the Nasdaq’s poor performance and reaction to higher bond yields. They now hold only a few high-conviction crypto coins and are overall bearish on risk assets.
Bitcoin: High-Risk, High-Return Investments
Traders have reduced expectations for Fed rate cuts this year, with pricing for 25 basis points cuts dropping to less than three from six at the start of the year. This shift, driven by sticky U.S. inflation and a robust labor market, has pushed the 10-year Treasury yield to 4.61%, the highest since November 2023. The increase in the risk-free rate has reduced the attractiveness of high-risk, high-return investments such as technology stocks and cryptocurrencies.
Thielen highlighted that the 2023/2024 bitcoin rally was largely driven by expectations of rate cuts, a narrative now challenged by current conditions. He also noted a drying up of inflows into spot exchange-traded funds (ETFs), which play a crucial role in the crypto market.
The SEC’s approval of nearly a dozen spot BTC ETFs in January led to nearly $12 billion flowing into these vehicles. However, most of these flows occurred last quarter, and demand has waned this month, with the 5-day average of net inflows dropping to zero.
Thielen suggested that ETF flows tend to diminish unless prices keep rising, which has not been the case since early March. He also pointed out that investors might stay on the sidelines due to recent drawdowns.
As the hype around Bitcoin’s halving event on April 20 subsides, some expect the correction to accelerate. The event will reduce the per-block coin emission, effectively halving the pace of supply expansion.
Bitcoin is currently trading at $62,600, up 42% year-to-date, while the CoinDesk 20 Index is up 17% for the year, standing at 2119 points.
